Italy's Renzi offers deal to party rebels, but warns of rupture

ROME (Reuters) - Italian Prime Minister Matteo Renzi offered an olive branch on Monday to party rebels who are threatening to vote down a referendum on constitutional reform later this year, but said he would not let them hold Italy hostage.

A number of senior figures within the centre-left Democratic Party (PD) have tied their support for the referendum to the government rewriting the electoral law, saying parliament’s authority would be undermined unless there was a rethink.

Renzi has pinned his future to the Dec. 4 vote, but faces growing opposition from across the political spectrum, with recent opinion polls suggesting he could lose the ballot.

Looking to overcome doubts within his own party, Renzi said he was ready to overhaul the electoral law, which was only introduced last year and which he has said would help bring much-needed political stability to Italy.

“The PD is ready for a deep, serious discussion over this,” he told an executive meeting of PD leaders that was broadcast live over the Internet. But he disappointed rebels who have demanded that a new law must be in place before Dec. 4.

“We cannot do this during a referendum campaign,” he said. “Our responsibility to keep the party united cannot reach the point where we are holding the country back.”

The constitutional reform proposes drastically diminishing the powers of the upper house Senate, leaving most decision-making in the hands of the lower house.

This ties in with the electoral law, which guarantees a working majority to the winning party, enabling it to rule for a full five-year term - something that has not happened in Italy since World War Two. It also lets party leaders hand-pick many of their own parliamentary candidates, effectively giving them huge power over political life in Italy.

“We’re heading towards a government of a boss, who in effect will nominate a parliament which then decides everything,” Pier Luigi Bersani, a former PD leader, told Corriere della Sera newspaper on Sunday in an interview where he made clear he would vote ‘No’ on Dec. 4.

The splits within the PD are complicating Renzi’s efforts to convince a sceptical public of the need for the constitutional overhaul, with the prime minister warning of political paralysis if the reform is rejected.

“The constitutional reform is not a plaything. It represents a point of departure for the country. We are ready to have further thoughts about it, but we are not ready to block the country,” said Renzi.

Up until August, the prime minister repeatedly pledged to resign if he lost the referendum. He has since stopped discussing his future plans, saying it was distracting from the debate on the actual merits of the reform.

Critics say he is planning to stay in power whatever happens. But his authority would nonetheless be deeply undermined if Italian voters rejected his flagship legislation.